American Stock Exchange history
The Curb Exchange, as the American Stock Exchange (AMEX) was known in its early days, was one of the most colorful attractions in New York. The exchange was actually operated on the street, hence the term curb, and orders for execution were yelled down, or hand signaled, to brokers from clerks in windows of the offices overlooking the street. Brightly colored jackets or hats were also worn by the brokers on the street, so that clerks could more easily identify their own broker—a custom still in use on most stock exchange floors around the world today. Hand signals thus became an integral part of this exchange and continue to be used to this day, despite the advent of electronics on the floor. Like other organized stock exchanges, the exchange uses the auction method of buying and selling stocks, whereby all orders pass through a specialist on the floor. After many years of rain, sleet, and snow, the exchange moved indoors in 1921 and was officially renamed the American Stock Exchange in 1953.
For many years, the AMEX served as an incubator for issues that would eventually get listed on this exchange after a period of trading in the “over-the-counter” market. It was from the American Stock Exchange that maturing issues then moved to the NEW YORK STOCK EXCHANGE (NYSE). In the 1960s, that progression began to change when some small companies became listed on the AMEX and grew into investor favorites but never changed their listings. With the growth of the NATIONAL ASSOCIATION OF SECURITIES DEALERS Automated Quotations market (NASDAQ) and the aggressive listing efforts of the NYSE, this long-standing procedure has become dormant in recent years. Stocks stay on NASDAQ or move directly to the NYSE, with few stopping at the American Stock Exchange in between. This has slowed the growth of the AMEX in recent years and forced it to search for other markets and other products.
In 1975, it became the second exchange in the United States to trade listed options, and this has been the exchange’s bright spot for the last three decades. Today the AMEX is the second largest volume trader of listed options, behind the Chicago Board Options Exchange, and has been the creator of many innovative derivative products. In addition to options, the exchange has successfully experimented with other hybrid types of instruments that combine features of stocks and MUTUAL FUNDS, especially those that represent a basket of market indicators. These are known as index funds and market baskets.
As a result of pressures created by the 1990s bull market, the exchange needed to establish links with other exchanges in order to survive. The need for capital to expand was intense because of the need for new communications and computer systems. Finally, in 1996 the AMEX was merged with the NASDAQ. The marriage between the two different types of market was initially unsuccessful, and the NASDAQ began searching for a buyer for the exchange. The growth of the AMEX in the future will be intimately tied to its ability to find a suitable merger partner and to continue to develop new investment vehicles that can engender trading in new derivative instruments if not stocks.
See also STOCK MARKETS.
Further reading
- Sobel, Robert. Amex: A History of the American Stock Exchange. New York: Weybright & Talley, 1972.
- ———. The Curbstone Brokers: The Origins of the American Stock Exchange. New York: Macmillan, 1970.
Lee Korins
